New Bill Takes Aim at Usurious Interest Rates on Consumer Loans

Several U.S. Senators are looking to eliminate the usurious interest rates often charged for various consumer loans. A recently introduced bill would cap the interest rate and fees charged for consumer credit transactions — which includes mortgages, car loans, credit cards, overdraft loans, car title loans, refund anticipation loans and payday loans — at 36 percent. This same cap already exists for military personnel and their families, and many states have put a similar cap in place.

Similar attempts to ban unconscionable interest rates that often reach as much as 463 percent have failed in the past, at least in part because of the difficulty in defining predatory lending. The bill seeks to avoid this problem by applying to a broad range of consumer credit transactions. The bill runs in tandem with other legislation aimed at protecting consumers. But the reality is that the predatory lending industry will spend whatever it takes to kill this consumer-friendly legislation.